The Covid-19 pandemic inflicted unprecedented damage to economies across the globe. While a recovery is underway, it is not necessary that both the rich and the poor will recover equally. The World Inequality Report 2022, released on December 7, shows this is indeed the case. Apart from wealth, it tracks other inequalities that have become important in today’s world, such as that in greenhouse gas emissions.
The report, produced by the World Inequality Lab hosted at the Paris School of Economics and the University of Berkeley, California, shows that the richest in India increased their share of wealth in 2021 by a historic degree. It also shows that women in India have a much lower share in labour income compared to their global peers.
Share of bottom 50% in India’s wealth is the lowest ever
In 2021, the average household wealth in India was ₹983,010 per adult, according to the report. However, this figure is driven by some of the wealthiest people in India. The top 10% owned assets worth ₹6,354,070 on average ( ₹63.5 lakh, and the top 1% own ₹324.5 lakh on average), which is 96 times more than the bottom 50% ( ₹66,280). As these numbers suggest, private wealth is concentrated in the hands of a few in India. In 2021, this concentration became more pronounced. The top 10% had a share of 64.64% in total household wealth, the highest since 1995, the earliest year for which this data is available. The share of the bottom 50% decreased to its lowest levels since 1995 to 5.9%. In 2020, the share of the top 10% was 63.94%, in 2019, 64.05%. And the share of the bottom 50% in 2020 was 6.02%, and in 2019, 6%.
To be sure, this trend was not unique to India. Billionaires (individuals owning at least $1b in nominal terms) increased their share in total household wealth of the world from 2.20% in 2020 to 3.34% in 2021. This 52% increase in share is the highest since 1996. The top 0.1% registered an 8.3% growth – 4th highest since 1996 – in their share to amass 11.11% of the world’s household wealth. The entry threshold of top 0.1% was €693,000 (PPP) in 1995 and is €16,666,000 today.
Income inequality in India is as high as it was under British colonial rule
Wealth represents assets minus debts at a point in time. Income is the money that a person receives in an interval, such as wages. According to the report, income inequality is generally less than wealth inequality. For India, it estimates that the top 10% earners make 20 times ( ₹1,166,520) as much as the bottom 50% ( ₹53,610).
In terms of concentration, the top 10% accounts for 57.1% of the income now, while the bottom 50% receive only 13.1%. To be sure, the top earners have not achieved this level of concentration in a linear fashion. In colonial times, their share was around 50%, but started decreasing after independence, reaching a low of 30.9% in 1982, before it started increasing again. “After independence, socialist-inspired five-year plans contributed to reducing this share to 35-40%. Since the mid-1980s, deregulation and liberalisation policies have led to one of the most extreme increases in income and wealth inequality observed in the world,” the report says.
To be sure, these figures are not the most recent and have not changed in the dataset since 2014. “Over the past three years, the quality of inequality data released by the government has seriously deteriorated, making it particularly difficult to assess recent inequality changes,” the report adds.
Indian women’s share in labour income is much less than their global peers
The World Inequality Report 2022 also estimates gender inequality in global earnings. The earnings estimated for this only take into account labour income, or wages and salaries and labour share of self-employment income. This shows that women received only 18.3% of the labour income in 2020 in India. This is almost half the share that accrued to women in other developing economies such as Brazil (38.5%) and China (33.4%), as well as the global average (34.70%). Among different regions of the world, Indian women’s share in earnings comes close to the proportion in MENA (Middle East and North Africa) . Women’s share in labour earnings in India has also grown at a slower rate between 2010 and 2020 (19% increase) than between 2000 and 2010 (36% increase).
Inequalities in GHG emissions are not just a rich and poor country issue
The climate crisis caused by global warming is one of the great 21st century challenges. It has also brought forward another dimension of inequality: ecological inequality. One of its forms is the differences in greenhouse gas (GHG) emissions across the globe. In climate negotiations, for example, developing and under-developed countries ask for fewer curbs on their emissions because they have contributed less historically to the stock of GHGs in the atmosphere. The World Inequality Report, however, shows that emissions are not necessarily a rich and poor country issue.
The richest within different countries emit disproportionately more. India’s top 10% emits 9 times as much GHG per capita as the bottom 50%, although it is still less than all major regional averages. On the other hand, even the poor in some country might emit more than the rich in another. The bottom 50% in North America, for instance, emits 9.7 tonnes of CO2 equivalent per capita per year. This is similar to the 10.6 tonnes of CO2 equivalent emitted by the middle 40% in Europe per capita per year.
Abhishek Jha is a data journalist. He analyses public data for finding news, with a focus on the environment, Indian politics and economy, and Covid-19.
The wealth of the top 10 richest in India stands at Rs 27.52 lakh crore ($335.7 billion, an increase of around $110 billion which is an 32.8 per cent rise from 2021). “Following the pandemic in 2019, the bottom 50 per cent of the population have continued to see their wealth chipped away.
UHNIs or the super-rich are defined as those who have an investable surplus of Rs 25 crore or more. On average, Indian UHNIs own an average of 5.1 homes, while the global number is 4.1.
India's top 1% owned more than 40.5% of its total wealth in 2021, according to a new report by Oxfam. In 2022, the number of billionaires in the country increased to 166 from from 102 in 2020, the report said. Meanwhile, it added that the poor in India "are unable to afford even basic necessities to survive".
In order to be in the top 20% of income, you'd need to earn nearly double that amount or an average of $130,545 per year. That's according to a SmartAsset study of income distributions in the 100 largest U.S. cities.
They found that the top 20% of all Americans earn over $130,000 in income. Thats over 5 times more than the bottom 20%. While that's interesting in and of itself, what even more important is that the top 20% are also receiving over 50% of all the income earned in the country.
In 2021, the majority of Indian adults accounted for wealth of 10,000 U.S. dollars or lesser. On the other hand, about 0.1 percent were worth more than one million dollars that year.
According to the World Inequality Database, an annual income of Rs 18.6 lakh or more in 2021 would put an Indian among the richest 1 percent of the country.
The report has clubbed these groups into seven categories, ranging from the “destitutes” (those with an annual family income of under Rs 1,25,000 or$1,700 in 2020-21) to the “super rich” (annual family income of over Rs 2 crore or $270,000 in 2020-21) with the middle class in between.
To be in the top 5 percent, your minimum wealth should be $45,909, while you require a minimum of $22,476 to be among the richest 10 percent of Indian adults. In rupee terms, you should have just Rs 16.74 lakh to be in the top 10 percent.
How many $4 or $5 millionaires are there in the US? Somewhere around 4,473,836 households have $4 million or more in wealth, while around 3,592,054 have at least $5 million. Respectively, that is 3.48% and 2.79% of all households in America.
In fact, the average American household earns a median income of under $70,000, but in some places, the top 1% can earn as much as $955,000. Those annual earnings can seem far out of reach in a country where less than 10% of all households earn more than $200,000, according to the U.S. Census Bureau.
The earlier you plan for retirement, the better shape you're likely to be in. Bringing in $100,000 a year may require total investments worth close to $2 million. Social Security, pensions, and retirement accounts are not the only sources of income in retirement.
Additionally, statistics show that the top 2% of the United States population has a net worth of about $2.4 million. On the other hand, the top 5% wealthiest Americans have a net worth of just over $1 million.
Between 35 to 44, the average net worth is $436,200, while between 45 to 54 that number increases to $833,200. Average net worth cracks the $1 million mark between 55 to 64, reaching $1,175,900.
Similarly, the income bracket above Rs 10 lakh per annum, as a proportion of total taxpayers, has grown from 5.6% in FY15 to 12.8% in FY21. The largest single-year jump in this category was seen between FY20 and FY21, from 54 lakh taxpayers to 81 lakh taxpayers in the above Rs 10 lakh per annum income bracket.
It shows that even the top 20% of households earn less than . 1 lakh per annum per capita. The bottom 20% of households earn just ₹25,825 per year per capita. LASI also gives quintile-wise per capita incomes for different professions.
To be in the top 5 percent, your minimum wealth should be $45,909, while you require a minimum of $22,476 to be among the richest 10 percent of Indian adults. In rupee terms, you should have just Rs 16.74 lakh to be in the top 10 percent.
In India, the middle-income group is defined as households with an annual income between INR 7.5 lakh and INR 15 lakh. According to a recent report by the National Statistical Office (NSO), the per capita income in India in 2020-21 was INR 1,27,768.
The average salary in India is INR 21,000 per month which can sometimes go up to INR 31,900 depending on the industry in which they work. Working in the industry that is most in demand will increase your chances of earning a higher salary eventually.
Considering the average monthly salary to be INR 31,900, the total annual earnings come to INR 3,82,800. In other words, the average monthly salary comes to around $428.49 per month (based on the exchange rates that were applicable in July 2021).
Median salary: India's median salary is 29,400 INR per month (392.07 USD). This implies that half of the Indian population earns less than 29,400 INR every month, while the other half earns more than 29,400 INR.
If you earn more than 50 lacs a year you're in the top 0.3% of India. Above 25 lacs, you're in the top 1.2% of India. Only 3.2% of Indians earn above 15 lacs a year. Wealth is so unevenly distributed.
“While I think ₹1 lakh salary is not entirely the norm, it is easier to get to this number if you are working in the private sector, especially in cities such as Bengaluru, Delhi-NCR or Mumbai," said Roy. Industry experts concur.
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